In case such ODIs are transferred, the issuer should give the complete trail of such transfers to SEBI on demand.

PROVISIONS OF THE PAPER

SEBI has planned to levy a supervisory fee of $1,000 on every foreign portfolio investor (FPI) that issues ODIs or PNs. This fee would have to be paid by SEBI registered FPIs once every three years for each of their P-Notes subscriber.

The controller has also proposed to prohibit ODIs from being issued against derivatives for speculative purposes. Currently, ODIs are issued against derivatives along with equity and debt.

SEBI has given time until December 31, 2020, to wind up ODIs issued against derivatives, which are not for evading purpose. It will be mandatory on Foreign Portfolio Investor to ensure that ODI is issued against derivatives which are virtuously for equivocation purpose and not for speculation.

SIGNIFICANCE

It will discourage the P-Notes subscribers from taking this route and encourage them to directly take registration as a Foreign Portfolio Investor. This would also be a step towards preventing money laundering.

It would also be useful to avoid any treaty shopping practices and tax avoidance.